This morning, the Connector Board voted on the 2010 Affordability Schedule. The vote was a compromise between various positions and interests amongst Board members. Health Care For All and the ACT!! Coalition argued strongly for 0% increase, and we are concerned for middle-income Bay Staters who have trouble affording their increasing health care costs (see the ACT!! Coalition’s comments to the Board). In the spirit of cooperation, we are pleased that those under 300% of the federal poverty level are protected under today’s decision and that there is a graduated increase for those in higher income categories. We congratulate Secretary Gonzalez on a smooth decision-making process, and we look forward to re-examining the determination of the Affordability Schedule in future years.
Materials from Connector Board the meeting can be found here; our full report is after the jump.
Jon Kingsdale opened the meeting by reporting that there has been a lot of interest in and demand for the Connector’s new Business Express product, which seeks to give small businesses more affordable options to cover their employees.
2010 Affordability Schedule
Before the Board engaged in discussion and a vote on the Affordability Schedule, Connector staffer Kaitlyn Kenney gave a comprehensive presentation on the options for changing the Affordability Schedule and provided new analyses on the impact of each option.
Kenney reminded the Board that Commonwealth Care premiums cannot be increased under federal maintenance of effort requirements. Rick Lord asked when the maintenance of effort requirements ended; Secretary Gonzalez responded that currently the enhanced federal match (FMAP) is slated to end December 31, 2010, but will likely continue until the end of FY11, which is June 30, 2011. The U.S. Senate voted yesterday to continue enhanced FMAP through FY11.
Next, Kenney provided a summary of the options for the 2010 Affordability Schedule presented at the February 11th meeting:
1. Make no changes to affordability schedule
2. Increase premium contributions by 3.5%
1. Across all income categories
2. Above 300% FPL only
3. Increase premium contributions by 7%
1. Across all income categories
2. Above 300% FPL only
Seeking a fair compromise and unanimous Board vote, Secretary Gonzalez asked Connector staff and Board members to consider a fourth option, a graduated increase in the Affordability Schedule:
- 0% increase 0-300% FPL (federal poverty level)
- 2.5% increase 300.1-360 FPL
- 3% increase 360.1-408% FPL
- 3.5% increase 408.1-504% FPL
Kenney then summarized the public comments the Connector received. All comments supported no changes to the Affordability Schedule for 2010, asking for consideration of: the economic climate; requiring a consistent percentage of income spent on premiums; and including cost-sharing in addition to premiums (see ACT!!’s comments (pdf) on the Affordability Schedule).
Kenney went on to present how each option would affect the reach of the individual mandate. The option of no change in the Affordability Schedule would result in the most exemptions from the mandate; a 7% increase would result in the fewest exemptions. The graduated approach (option 4) would require several groups from the Cape & Islands to be newly subject to he mandate, because of a less expensive insurance option that has become available in that region.
Kenney presented additional individual mandate impact analyses using data from the Division of Health Care Finance and Policy (DHCFP) and the Associated Industries of Massachusetts (AIM) employer surveys. Using the DHCFP data, Connector staff deduced that families 300-400% FPL would be subject to the mandate only under a 7% increase in the Affordability Schedule; the AIM data suggest that individuals and couples at 250-300% FPL would only be subject to the mandate under the 7% increase. In other words, if the Affordability Schedule is increased by 7%, these two income/family size groups would be required to buy insurance that is greater than the average employee contributions to employer-sponsored insurance. With that, Kenney passed it back to Secretary Gonzalez.
Gonzalez opened the Affordability Schedule discussion by asking for the Board’s support for option 4, the graduated approach. Gonzalez said he proposed the graduated approach in the spirit of compromise and an effort to reach consensus, not because this approach is ideal. As the decision about how to approach the 2010 Affordability Schedule has important implications for the individual mandate, re-emphasized his request for support of option 4.
Nancy Turnbull responded that she also hopes for support of option 4, the graduated approach, as it balances very diverse viewpoints. While option 4 makes increases higher than she’d like to see, Turnbull believes it is important to find common ground. She said that the graduated approach takes into consideration the current economic climate and the struggles of low-income individuals and families.
Turnbull also gave a nod to Jon Gruber for sharing reports he authored, which helped Turnbull clarify the issue of de-linking the Affordability Schedule from Commonwealth Care premiums. Turnbull also commented that the information he provided on Section 125 plans was also helpful; however, they don’t work for everyone. For example, gay couples and families have to pay for health insurance with pre-tax dollars due to federal restrictions. Turnbull expressed hope that the Board will engage in a more robust conversation and process and take a fresh look on how affordability is determined, so it’s a little more automatic year-to-year.
Turnbull asked the Board to think about:
- How the percentage of income has changed cumulatively over time, especially for those on a fixed income. It is important to look at specific incomes, not just FPL levels;
- Looking at couples and families in more detail;
- Particular concerns with the cost of non-group coverage for older people;
- The need to take a fresh look at how to incorporate cost-sharing into the Affordability Schedule; and
- The continued rising costs of premiums and cost-sharing. Turnbull concluded, “Cost will erode the mandate faster than any differences in opinion.”
Gonzalez responded to Turnbull by stating that this is his first time through the Affordability Schedule process, and he thinks it is a great time to take a step back and look at how the Board calculates the Affordability Schedule, especially with national health reform in the mix.
Dolores Mitchell commented that it would be helpful to go back to the minutes of the early (~2006) Board meetings, during which there were more rigorous and difficult conversations about the Affordability Schedule. It will be useful to take lessons from these discussions in trying to develop an Affordability Schedule formula. Jon Kingsdale commented that he “still has many scars from that process.”
Celia Wcislo agreed with Nancy Turnbull’s statements. She said there is no need to have a fight about the Affordability Schedule every year. “If I had it my way,” Wcislo said, “there would be a 0% increase for everyone.” However, she recognizes the need for compromise and will vote for the graduated approach. Wcislo also talked about the importance of the Board’s participation in tackling health care costs. Like Turnbull, Wcislo gave a nod to Jon Gruber’s reports, saying that it helped her think differently about de-linking CommCare premiums from affordability and opened her mind to tax credits. She also recognized that it is probably a good time to take a look at instituting a percentage of income to calculate affordability, as this approach is moving on the federal level.
Jon Gruber emphasized the great work the Connector staff has done to run its programs successfully, even though much of the work is based on decisions made rather quickly in 2006. Gruber thinks it is a good time to take another look at affordability not only because of national reform, but also because many people who currently sit on the Board were not there in the beginning.
Lou Malzone commented that the Board is fortunate to have good support and information from Connector staff. He reminded the Board that the first affordability vote in 2006 was contentious and not unanimous, but the Board did it and moved forward. Malzone agreed with earlier comments that health care costs really need to be addressed. “Because national health reform has not been enacted,” Malzone said, “costs continue to increase.” Back to the Affordability Schedule, Malzone said he supports the compromise proposal.
Echoing earlier comments, Dolores Mitchell commented that it is important that the “Commonwealth pick up the baton and do something about cost. Not just premiums, but the underlying causes of rising costs.” With the DOI and DHCFP hearings, and several proposals to tackle small business costs, this issue has recently gotten a lot of press. Mitchell continued by saying that the state needs “active participation in the cost debate, otherwise when the pressure’s off, it’ll go away. An affordability formula doesn’t matter is we don’t address cost.”
Ian Duncan said that he also supports the compromise position. While he was not part of the original affordability discussions, Duncan feels that the Connector approaches the Affordability Schedule with a “patch” approach every year, and needs to look at the longer-term implications. For example, if people are required to pay 8% of their income for health insurance premiums, but their incomes are going up only slightly or not at all, how many more people will fall off the mandate over time?
With that, Secretary Gonazlez asked for a vote on the graduated approach to the 2010 Affordability Schedule. The Board voted unanimously to adopt this approach.
Legal Immigrant Coverage Lawsuit
The Board also voted unanimously to move into Executive Session for their conversation about the lawsuit recently filed by Health Law Advocates on behalf of several “special status” legal immigrants. Thus, the public portion of the meeting ended.
The next Connector Board meeting is on April 8th.
-Suzanne Curry
